Using the rat hypothalamo-neurohypophysial system as a model, we have identified the common precursors (20,000 mw prohormones) of vasopressin, oxytocin, and their respective neurophysins. The peptides and neurophysin are synthesized first as a protein precursor(s) (mw, 20,000 daltons) and the enzymatic degradation of the precursor occurs intragranularly during axonal transport. Two precursors, one for vasopressin and one for oxytocin have been identified immunologically. Rats with heredity diabetes insipidus do not synthesize the vasopressin precursor. We have been able to demonstrate regulation of the biosynthesis and conversion process by relevant physiological stimuli (e.g., dehydration and lactation).